On March 4, 2020, three Mexican Senate Committees approved in a joint session the general terms of the cannabis bill for a new Law for Cannabis Regulation (Ley de Regulacion del Cannabis) – last version circulated on February 28, 2020 (the “Bill”). The Committees’ approval placed the Bill on its way to the Senate’s general vote.

During the meeting, specific reservations were brought by Senators who voted in favor of the bill. Such reservations (i.e. issues raised for proposed minor changes) relate to recreational user rights, obstacles for the emergence of the hemp industry, and barriers for market entry affecting farmer communities, among other subjects. The controversial provisions that poise obstacles for the hemp industry derive from the lack of clear distinction between rules that would apply to cannabis and hemp. Some affirm this may deter the birth and development of such an industry.

The Senate Committees approval created the expectation that the Bill would relatively soon be submitted to general vote. However, on March 24, 2020 Senate’s Political Coordination Board (Junta de Coordinación Política, formed by members of all political parties) resolved to suspend the Senate Regular Sessions before the April 30 official end date due to COVID-19 contingency. The suspension period will have the effect of interrupting any legal or statutory term until COVID-19 sanitary risks are reduced at a minimum.

Mexican Supreme Court Grants a Second Extension for Cannabis Bill

Later, on April 17, 2020, the Mexican Supreme Court (“SCJN”) granted a second extension for the Senate to pass the Bill. The SCJN granted the new extension mandating that legalization be in place by the end of the next legislative period, which starts on September 1st and ends on December 15, 2020.

Pursuant to the Bill, restrictive provisions such as the 49% limit on foreign investment and the ban on vertical integration, remain in the Bill. All in all, the Senate Committees’ approval remains an important step.

Once the Bill’s legislative process is successful and eventually concludes with the publication of the new law, the agency tasked with regulating the market and issuing available licenses (Instituto Mexicano del Cannabis, or Mexican Cannabis Institute) will be set to operate approximately one year after publication. The original date set in the October 2019 draft was January of 2021, but it will have to be updated in accordance with the new timeline.

It is expected that such a new extension may allow more time for the Senate to make minor changes to the Bill in general terms, but some advocates and industry players also expect to continue their lobbying efforts about those areas of opportunity that have been identified in the current document.

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If you’re interested in learning more about the Mexican legalization process and what you or your clients can start doing to enter the Mexican market, please contact us at luis@hoban.law.